NHLPA proposal gives ground on money, structure of the deal; obstinately holds the line on contract matters

The NHL has pushed Donald Fehr and the NHLPA for a complete CBA proposal, a document that will allow the league to know exactly where the association stands on the multitude of issues still under consideration. On Wednesday morning, the players’ association acquiesced to those demands, producing a six-page proposal that takes stands on a wide range of issues. A copy of the proposal was obtained by TSN, and a quick reading reveals it to be an interesting mix of give and take.

Of course, much of the document is difficult to understand. When the NHL made their “offer to save an 82-game season” they published in on their website and used clear language, ensuring the offer was understandable for players, media and fans alike. The NHLPA’s latest offer is not on their website and features abundant references to discussions that only the NHL and NHLPA leadership were privy to; of all the offers made to date it is the one that is most clearly intended solely for the other party in the negotiation and not for the public.

The head line is the remaining gap: $182 million, according to the NHLPA (though they take pains to characterize that gap as “undisputed”). The key paragraph from the union’s memo to players:

Now that we have made this proposal, there is no longer any doubt as to how far apart the parties are in dollars. As you will recall, we had previously said we thought the gap was less than $200M, while the owners had said that the gap was much larger and close to $1B. Under our proposal, it is now undisputed that the gap is only $182 M over 5 years. Now it is up to the owners to finally make a move towards the players.

That is a problematic paragraph – in broad strokes it is accurate, but there are a number of caveats worth noting based on the copy of the proposal that TSN acquired.

The players’ share. This is the most important part of the document, the bit that spells out the dollar gap between the two sides. The first paragraph reads like this:

Our players’ share proposal is identical to yours in all material respects except for the amount of the transition payments added to the 50% share. There are no guarantees or fixed targets, other than a requirement that, beginning with the second year of the Agreement, players’ share, expressed in dollars, may not fall below its value for the prior season. This proposal allows us to determine players’ share regardless of the effects of the lockout and its aftermath.

(emphasis added)

We will get to the transition payments in a moment, but basically this is an agreement on a 50/50 split of hockey-related revenue. The catch is the portion I have italicized – the player’s share cannot move backward if the NHL sees revenues fall. This particular caveat would have been meaningless in the last agreement – where revenues went up – and because it does not come into effect until year two (if I’m reading it correctly) it doesn’t mean that the players are protected from a drop in NHL revenue immediately following the lockout, only from long-term damage to the game. Technically, it eliminates the owners’ cost certainty – if revenues fall, the players’ percentage will go up – but for the most part this reads like basic acceptance of the owners’ terms.

Probably as critical is this line, inserted near the very end of the document:

The Upper Limit may not fall below 67.25 M in any year of the agreement. This is half way between the 11/12 Upper Limit (64.3 M) and the 12/13 UL (70.2 M).

Holding the cap in place is different than holding the players’ share in place. If revenues drop while the cap stays high, escrow payments will mean that the players’ share stays constant at 50/50 (depending on what happens with escrow, which is less than 100 percent clear to me based on this proposal. What this will do is ensure that NHL teams continue signing guys to contracts, regardless of what happens with revenues.

Beyond that, the $180 million gap in the “make whole” agreement remains – the NHLPA wants that much more guaranteed money than the league offered in its last proposal.

Player contracting and system issues. This is an area where the NHLPA’s proposal is pretty ambitious, though it does move in the league’s direction on some matters.

For starters, the league’s idea of term limits on contracts is rejected outright. Instead, the NHLPA offers a different approach to deal with contract back-diving:

NHLPA cap benefit recapture proposal.
o Applies only to new contracts, i.e., contracts entered into after a new CBA is in effect.
o Applies to contracts of 9 years or longer
o 35 year old rule changed to provide that the cap charge taken will be as per cap benefit recapture

I haven’t seen a copy of the NHLPA’s cap benefit recapture proposal, but given that eliminating backdiving is in the interests of both parties, it seems likely that it will eliminate the benefits of the practice. What it does not do is prevent teams from buying the UFA years of restricted free agents – in other words, big, long contracts to young players would still be commonplace.

Update: Elliotte Friedman has a breakdown of the NHLPA’s backdiving proposal, and it does indeed penalize teams that engage in backdiving in a meaningful way. What it does not do is prevent teams from front-loading contracts to attract free agents, or making the short-sighted decision to accept long-term pain in the hopes of short-term gain. It’s worth noting that this proposal only applies to deals nine years or longer and signed under the new CBA.

The NHLPA proposal also does the following:

– Eliminates the ability of teams to walk away from arbitration decisions. This is a big one; a team close to the cap would face the unpleasant prospect of not qualifying an arbitration-eligible player (or dealing his rights for whatever they could get) for fear of being put over the salary cap by an unfavourable ruling.

– Teams can no longer buyout players making less than $3 million per year. When teams overpay for depth guys (hello, Robert Nilsson) they will no longer have the option to buy them out.

– Adoption of the Goepfert rule. This is another area where the exact meaning is clear only to the two parties at the table, but Eric Hornick tweets that it relates to the loophole that has allowed college players (such as Justin Schultz) to became unrestricted free agents at a young age. The rule would seem to be named after Penguins draft pick Bobby Goepfert.

– Shifts the gap between the salary cap and the salary floor from a dollar figure to a percentage. The floor would now be 20 percent below the midpoint and the cap 20 percent above, rather than 8 million +/- the floor. This is a common sense fix that should be included in the new agreement no matter what.

– Eliminates re-entry waivers. This will allow teams to recall the best available player in the minors regardless of his contract, and is another good move.

– Players sent to Europe or demoted to the minors with a contract worth more than $1 million would now continue to count against the salary cap – but interestingly, not against the players’ 50 percent share of hockey-related revenue.

– Teams can make as many recalls as they like late in the year. This is the rule that resulted in the Oilers’ recalling Magnus Paajarvi than being forced to send him back down because they weren’t actually able to recall him. Now, NHL teams will not be limited to four post-trade deadline recalls.

Teams can now trade money. To encourage trades (and make that extra cap space that small market teams have worthwhile), NHL clubs will now be permitted to retain player salary when making trades – up to 15 percent of the upper limit in any league year. That doesn’t sound like a lot, but against a $67.5 million cap it’s a huge number, in excess of $10 million.

A different standard for NHL discipline. Players could now appeal to a review board (three arbitrators, with one appointed by each side and one neutral) for on-ice discipline on the grounds of either a lack of evidence or a departure from past NHL practice. For off-ice discipline (a good example would be Sean Avery’s comments about Elisha Cuthbert) appeals could be made on the grounds of just cause: basically, this would prevent the league from making the rules up for off-ice behaviour as they go along.

Expanded revenue sharing. The first plank in the NHLPA’s proposal would call for a $200 million revenue sharing pot that would increase or decrease based on league revenues, as well as a $60 million Industry Growth Fund. The former would help to subsidize the league’s smallest markets while the latter would be administered jointly by players and owners (with the owners having a majority of votes) and used for either team-specific or league-wide programs.

There’s more in the full agreement, but those issues stand out as the primary ones. While the proposal moves the NHLPA closer to the league’s last offer it still leaves significant gaps: $180 million in actual money, huge disagreements on player contracting (the NHLPA’s proposal actually offers the players more freedom in some areas) and the loss of absolute player cost certainty. There might be enough there to make some progress toward a deal, but there is no question that the union will battle for every inch beyond agreeing to 50/50 in the long-term.

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